£20bn loan scheme ‘to miss target’

Labour has claimed that George Osborne had talked "days ago" about increasing the size of the FLS schemeNeil Hall/Reuters

George Osborne’s National Loan Guarantee Scheme, which aims to direct £20 billion to small and medium businesses through loans, has so far lent only £2.5 billion, the Treasury said yesterday.

Sources said the programme was on track, as it was started only in March. But they also admitted that a scheme officially opened today, which is called Funding for Lending (FLS), is likely to supersede the guarantee scheme.

This suggests that the original target may never be met.

One banker said that, although the loans offered under the two schemes would be just as cheap, the new option was not specifically linked to lending to small business. “It doesn’t quite hold our feet to the fire in the same way,” he added.